Bank reconciliation statement format

The standard format

1. Corrected cash book balance
2. Add: unpresented cheques
3. Less: uncredited lodgements
4. Balance per bank statement

Filled example

Notes

• Update the cash book for bank charges and interest first.
• Add unpresented cheques; subtract uncredited lodgements.
• The final figure should equal the bank statement balance.

Building and reading this format

The business keeps a cash book. The bank keeps a statement. Both describe the same account, so any difference must come from items that one record has and the other does not have yet.

The bank reconciliation statement is a bridge between the two balances.

First update the cash book. The bank statement often shows items the business has not recorded yet: bank charges, interest, direct debits, standing orders, dividends paid straight into the account, and dishonoured cheques. These are real transactions, not timing differences.

Post them to the cash book to get the corrected balance. Only timing differences go in the reconciliation statement itself.

Then build the statement. Start with the corrected cash book balance.

Add unpresented cheques. These are cheques the business has written and recorded, but the payees have not yet banked, so the bank still shows the money. Then subtract uncredited lodgements (outstanding deposits). These are amounts the business recorded as paid in, but the bank has not yet processed.

The result is the balance on the bank statement. To get each direction right, ask which record is temporarily ahead.

For example, the corrected cash book shows RM8,500. Unpresented cheques are RM1,200 and uncredited lodgements are RM700. The bank statement balance is 8,500 + 1,200 − 700 = RM9,000.

A large total of unpresented cheques means many payments are still in transit. A large total of uncredited lodgements means recent receipts have not cleared yet.

Three mistakes cost the most marks. Putting bank charges or interest in the reconciliation is wrong, because they belong in the cash book. Adding uncredited lodgements and subtracting unpresented cheques is the wrong way round.

Not saying which balance you start from and which you end at leaves the marker unable to follow you. Also remember that a favourable cash book balance is a debit, but the bank's own records show the same money as a credit.

Label the top line "balance as per corrected cash book" and the last line "balance as per bank statement". If the statement does not end at the bank balance, an item has been missed or put on the wrong side.

If you often lose marks on which items to add and which to subtract, we can help. One of our teachers can walk you through a few past-paper reconciliations until the direction feels automatic. Book a trial class

Related how-to

• How to prepare a bank reconciliation statement

These formats are standard accounting practice with our own figures. Check your board's exact requirements on the exam boards page.